I am currently very happy. As I'm writing this, I am watching the BBC's coverage of the Olympic games.

The only thing remarkable about it is that I'm in the United States, where the BBC is not broadcast, and where NBC has exclusive broadcast rights to the Olympics.

As a result, I am using anti-internet-censorship technology of the kind that is favored by political dissidents trying to connect with the outside world against the wishes of oppressive regimes.

Normally, the Olympics would not require the kind of computer-address-scrambling technology used by revolutionaries, hackers and child pornographers – but good luck trying to get at live events any other way if you happen to live on US soil.

With the zeal of Pilgrim preachers hunting for witches, NBC has devoted itself to opposing the apparently morally and financially objectionable desire of Americans to watch a sports event as it happens.

NBC, which has exclusive rights to the Games here, forbids me from from watching almost all Olympics events live in the United States. Such programming won't exist on TV for the two-week duration of the Games.

Fine. Why not go to a computer for my fix of dressage, or to see the latest angelic smile from swimmer Ryan Lochte? NBC has me figured out. NBC is providing live streaming of many – not all – events, but the network forbids Americans from watching the Olympics live online except to those who pay $100 a month for a subscription to a cable-TV service of their choice.

No wonder there has been a vocal and simmering anti-NBC rebellion waged all weekend.

Prominent, media-savvy journalists, academics and viewers have spread the word to each other to use VPN technology and proxy services like TunnelBear and StreamVia to scramble our computer's addresses into ones that can access the BBC iPlayer, where 24 soothing streams of well-organized, brightly narrated, clever Olympics coverage await us.

It is like balm to our fevered souls. I could quote the comments from relieved viewers who have discovered the proxy method, but it would take up more pages than the Guardian has at hand.

Let's look at the comments of one vocal community. Twitter is an active engine of news, where highly informed people trade breaking news, links to stories and other matters of instantaneous importance (which is what made it so handy during the Arab spring).

Ever since the opening ceremony, broadcast in the US five hours after it was live in the UK, there were irritated tweets from viewers in a wide range of professions, from a penguin-keeper at the San Francisco zoo, to Wall Street investors, to many prominent journalists and editors, to athletes, to even employees of NBC affiliates.

A new hashtag, #NBCfail, was born to complain of the network's Olympics coverage. The hashtag, a way of categorizing tweets, festooned thousands of the mini-messages in just one day, with some estimates that it may have reached the eyes of over 2 million people.

The #NBCfail hashtag – which is entertaining reading – wasn't just about the tape delay, which might have been unavoidable. It was about the determined refusal of NBC to acknowledge that some viewers might want live coverage, particularly on a weekend, and the announcers also came under fire for less-than-sharp narration.

The ensuing PR disaster was initially handled haughtily by NBC's public relations machine, which went on the offensive to email as many journalists as possible and insisted on characterizing viewers who want to watch live sports as some sort of crank fringe group. The conflagration eventually necessitated hours of hand-to-hand Twitter judo from NBC's own executive producer of the Olympics.

In response to the complaints, NBC stated its intentions publicly: to herd Olympics viewers into exclusively primetime viewership of the games. There was no sleight of hand in NBC's admission: it was completely open.

This make some business sense. High primetime viewership helps NBC, and other networks, set higher advertising rates in the future, which explains why NBC paid $1.1bn for the right to broadcast the games. And indeed, NBC's public relations machine has voiced pride at the high ratings over the first two days of the Olympics and claimed success over the channel's strategy of herding viewers to TVs at hours appointed by the network.

Viewers, one can say, are less sanguine. Trying to herd modern, internet-savvy audiences to a TV at night is akin to turning off the nation's stoves and asking them to cook over open fires.

It is absolutely extraordinary that smart viewers are frustrated with NBC's coverage and flaunting their use of proxy services to watch the BBC. It is not piracy – the proxy services are legal, and the BBC has broadcast rights too – but the fact that tech CEOs, journalists and others are sharing tips about how to avoid a major network is a sign that the network is missing a crucial turning point in responding to what audiences want from Olympics coverage.

Forcing viewers to give CPR to a corpse

What audiences want is actually not so radical: they want the news as it happens. What NBC doesn't realize is that sports are news. It has handed responsibility for Olympics coverage to its entertainment division.

The result is like a bad sitcom: an awkwardly serialized version of news events that every savvy watcher has seen elsewhere.

It is clear that NBC will stick to its guns – there is no doubt it is locked into its contracts – but the question that I and many other journalists and regular viewers have been asking all weekend is: is this the best way?

In a media industry dying from lack of profits and inattention, is the ideal solution to force viewers back into the past?

Most Americans would recognize that NBC needs to make money on the Olympics. It is not at all clear, on the other hand, that NBC needs to make money by forbidding millions of people from watching the Olympics.

The Olympics should be an easy, slow ball for the networks. It's a feel-good, love-in global sports event.

But NBC has raised a series of logistical challenges that suggests viewers are actually trying to access not skeet-shooting and dressage, but fetish pornography.

First, there is the cable issue. Forcing viewers to subscribe to cable TV can be compared to forcing an entire nation of viewers to give CPR to a corpse.

A growing movement of "cord-cutters" in the US have chosen to dispense with the empty and expensive wasteland of cable programming, instead opting for more bespoke TV viewing by downloading TV shows and movies from iTunes, Netflix and Hulu. These cord-cutters are not just teenagers or cranks. With the American economy weak and households buried under debt, many Americans have economized by cutting out their cable subscriptions. The trend has accelerated in 2011, when about 1 million viewers cancelled their cable or satellite TV service, and another million are expected to cancel this year, according to the Convergence Consulting Group. Convergence estimates that 2.65 million subscribers to cable or satellite services have opted out since 2008.

The TV option provides more baffling annoyances. The tape-delayed events NBC is playing on TV are the most popular ones, in which the US has the most at stake – like Ryan Lochte's friendly swimming face-off against Michael Phelps. NBC plays the events in full, at the leisure of the network, and only after 8pm each night. The programming extends until 1.30am, well after the bedtime of working Americans. Forget about evening plans, dinner with the kids or any other primetime viewing you may have had in mind: NBC expects you to hold everything until the network is done wanly televising old events.

That might be a plausible commitment if the events were live, but instead we get only sadly reheated video from earlier in the day, and empty promises that NBC will keep it pure despite the obvious problem of a 24-hour news cycle.

While it was inspiring to watch Ryan Lochte win the first US gold, it was no surprise and there was no tension: one could read all the highlights in a battery of news stories that were written shortly after the victory. By the time NBC televised the event, by the way, it was 9.30pm EDT. Few American children, looking for Olympic inspiration, could watch their heroes at that hour. Luckily, those children could have heard the result on NBC's own Nightly News hours earlier, which had a full report on the Lochte/Phelps race before any Americans had a chance to actually watch the race.

It is impossible, in the age of cable news, email alerts, Twitter and Facebook, for NBC to pretend that it can keep the suspense, tension and thrills of the Olympics on a hot plate until primetime. This is not the 1940s, when families gathered by the radio to hear to news and serials. More Americans than ever watch "television" without actually being in front of one.

There are other, profitable models

In one particularly bizarre instance, NBC announcer Bob Costas promised at 8pm on Saturday that the network's programming for the evening would include "no spoilers," even though the events had taken place in mid-morning and the striking results were publicized widely on every major news outlet, sports website, Facebook and Twitter.

When the time to watch does come, good luck finding the correct channel – NBC owns at least five television channels in the US. Tracking down, on a daily basis, an accurate schedule of which event plays on which channel requires an assistant, flowcharts and deep patience.

The restrictions against live viewing of the Olympics are all the more perplexing because it's not as if there aren't perfectly plausible, profit-making ways to deliver live coverage.

It's not as if people won't watch sports online. The BBC's iPlayer had 3.3m views just on the first day of the Olympics. This demonstrates that demand is clearly there.

Alternatively, NBC could easily try the same model it used for the Tour de France, where viewers could pay $29 for a full online package of viewing.

NBC could also opt for the iTunes or Netflix model, of allowing people to buy by the day, or event, a more bespoke kind of coverage. Online subscriptions could not only pour money direct into the network's coffers, but also could fuel more ad revenue.

There were other options. The network could have run events live during the day and used its valuable prime-time real-estate for the very best highlights and smart announcing, with athlete interviews and human interest. As one frustrated commenter on Twitter said: "It is the Olympics. People will watch."

Perhaps charging viewers could also make NBC raise the bar for its presentation of the Olympics, which has come under fire for its disappointing quality.

The origins of the #NBCfail hashtag were not, initially, complaints about tape delays. The start was complaints about the lackluster quality of the network's narration around Olympic events, starting with two millionaire journalists reveling in their ignorance of the identity of opening ceremony star and inventor of the web, Tim Berners-Lee ("Google him," one anchor flippantly advised).

It would be nice, if nothing else, for our TV personalities to elevate the proceedings, particularly since NBC explained the need for its tape delay by claiming it would provide "context".

This shambles was capped with a particularly disastrous series of condescending remarks during the parade of nations. It was an embarrassment to intelligent viewers to watch trained TV anchors link Kazakhstan to Borat, describing Luxembourg as a central European nation, note that Uganda's athletes come from the country of Idi Amin, mispronounce the names of Niger and the Cote D'Ivoire, and otherwise support every ugly American stereotype.

The smartest thing any announcer said during the opening ceremony was Matt Lauer's honest, if gauche, comment that he couldn't decide if the Olympic baby was "cute or creepy." Finally, it was a comment not fed to him by some serf-like intern slaving away at a pile of index cards quoting Wikipedia factoids.

Then one of the anchors enthusiastically described the Queen's entrance in the opening ceremonies as the "money shot", not realizing that the phrase is more often an obscene one.

What is most disappointing about NBC's handling of the Olympics, to most journalists who spoke about it, is that it was a vote for the past, a denial of the promise of technology to engage audiences and build buzz.

No one plausibly thinks that Americans will abandon their computers and devices and sit solely in front of the TV, being spoon-fed content. Well, they might, just this once. That will give NBC ratings enough to declare victory, although they may not realize it would be a pyrrhic one that has alienated audiences and hurt the network's reputation as much as its recent bum's rush of respected anchor Ann Curry.

A prominent journalist messaged me, after hearing my complaints, that NBC is running "the last great buggy-whip Olympics". He meant that NBC is trying to get people out of their cars and into horse-drawn carriages. I'd take it back further. By denying viewers the chance to access and pay for live coverage, and pushing them back to TVs at appointed times, the network is unnecessarily trying to reinvent the wheel.

• Heidi Moore is the New York bureau chief and Wall Street correspondent for Marketplace, from American Public Media